After increasing his investment vehicle Premier Investments' (ASX: PMV) stake in Myer (ASX: MYR) this week, Solomon Lew is now converting his longstanding, vocal criticisms of the department store's board into action.
Upon acquiring $1.6 million worth of additional shares to take Premier's effective stake to 15.77 per cent, Lew expressed disappointment in the Myer board, claiming the company continued to "go backwards" in a market where innovative, experienced retailers are benefiting from the rapid changes at play.
Now the company has instructed its lawyers, Arnold Bloch Leibler, to immediately request a copy of the Myer share register ahead of calling an Extraordinary General Meeting (EGM).
"Premier has commenced consultation with fellow Myer shareholders regarding the quick reconstitution of a majority independent Myer Board with the necessary skills and experience. As part of this process, Premier has also retained a leading proxy solicitation firm," Premier said in a statement to the ASX.
"In Premier's view, Myer's three remaining non-executive directors should for once put its shareholders first and resign immediately. Any other action would be futile, and costly for Myer shareholders who have endured enough."
A Myer spokesperson says the board will provide Premier with a shareholder register now that a formal legal request is received, but has raised the alarm over a potential short-changing of shareholders if control is exerted by the minority holder without paying an "appropriate premium".
"The Myer Board is in consultation with its shareholders and will continue to act in the best interests of all shareholders," the spokesperson says.
"We do not believe it is in shareholders' best interests to allow Premier Investments to take or exert control of Myer without shareholders realising an appropriate premium and appropriate value for this effective change of control.
"We remain focused on having board matters resolved as soon as possible so that Myer can maintain its focus on business, serving our customers and creating value for all shareholders."
At the time of writing PMV shares were down 2.57 per cent today at $26.87 each, while MYR shares bucked an overall fall on the ASX to rise 2.3 per cent to $0.445 each.
Myer may be a better known brand than Premier itself, but Lew's company is larger by a significant multiple, worth $4.38 billion compared to Myer's $357.3 million.
Premier itself has a portfolio of retailers - including Peter Alexander, Smiggle, Jacquie E, Dotti, Portmans, Jay Jays and Just Jeans - that saw it notch a 15.8 per cent rise in global sales over pre-COVID times in the first 18 weeks of the second half.
On 11 June, before Sydney's lockdown, Premier Retail forecast earnings before interest and tax (EBIT) of $340-360 million for the 53 weeks to 31 July, representing a 103-115 per cent surge on FY19.
"The Group has successfully enabled customers to shop seamlessly either online or in-store during the COVID-19 health crisis," Premier Retail's outgoing CEO Mr Mark McInnes said at the time.
"This has been achieved through the long-term strategic investments made in our online capability combined with our ability to reach mutual agreements with landlords to appropriately rebase rents.
After its successful performance during the pandemic, Premier Retail has paid back $15.6 million in JobKeeper subsidies back to the Australian Tax Office (ATO), although in the period to 25 July last year it had already received $49 million from the scheme, and continued to receive the wage subsidy until 28 September last year.
In contrast, Myer reported a revenue dive of 13.1 per cent to $1.4 billion in the December half, and its bottom line was bolstered by $50.7 million in JobKeeper payments, resulting in the department store posting a 76 per cent increase to its interim profits for the December half.
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